I have, these last few months, been documenting the current state of geopolitics —specifically the growing isolation of the West, the ditching of the dollar as the global reserve currency, the growing unity between the authoritarian Eurasian nations, and the brewing storm in the middle east between Israel and Iran.
Now another piece of the puzzle falls into place.
From Zero Hedge:
Much has been spun in recent weeks to indicate that as a result of collapsing trade, Iran’s economy is in shambles and that the financial embargo hoisted upon the country by the insolvent, pardon, developed world is working. We had a totally different perspective on things “A Very Different Take On The “Iran Barters Gold For Food” Story” in which we essentially said that Iran, with the complicity of major trading partners like China, India and Russia is preparing to phase out the petrodollar: a move which would be impossible if key bilateral trade partners would not agree to it. Gradually it appears this is increasingly the case following a just released Reuters report that “Iran will take payment from its trading partners in gold instead of dollars, the Iranian state news agency IRNA quoted the central bank governor as saying on Tuesday.”
The Eurasian powers — centred around the troika of Russia, China, and Iran — continue to ransack the dollar’s legitimacy as the global reserve currency.
Meanwhile, in a Foreign Affairs piece, the architect of our current world order, Henry Kissinger, seems to see the writing on the wall:
The current world order was built largely without Chinese participation, and hence China sometimes feels less bound than others by its rules. Where the order does not suit Chinese preferences, Beijing has set up alternative arrangements, such as in the separate currency channels being established with Brazil and Japan and other countries. If the pattern becomes routine and spreads into many spheres of activity, competing world orders could evolve. Absent common goals coupled with agreed rules of restraint, institutionalized rivalry is likely to escalate beyond the calculations and intentions of its advocates. In an era in which unprecedented offensive capabilities and intrusive technologies multiply, the penalties of such a course could be drastic and perhaps irrevocable.
Kissinger recognises the Eurasian endgame — also described by me quite throughly over the six months:
Some American strategic thinkers argue that Chinese policy pursues two long-term objectives: displacing the United States as the preeminent power in the western Pacific and consolidating Asia into an exclusionary bloc deferring to Chinese economic and foreign policy interests. In this conception, even though China’s absolute military capacities are not formally equal to those of the United States, Beijing possesses the ability to pose unacceptable risks in a conflict with Washington and is developing increasingly sophisticated means to negate traditional U.S. advantages. Its invulnerable second-strike nuclear capability will eventually be paired with an expanding range of antiship ballistic missiles and asymmetric capabilities in new domains such as cyberspace and space.China could secure a dominant naval position through a series of island chains on its periphery, some fear, and once such a screen exists, China’s neighbors, dependent as they are on Chinese trade and uncertain of the United States’ ability to react, might adjust their policies according to Chinese preferences. Eventually, this could lead to the creation of a Sinocentric Asian bloc dominating the western Pacific. The most recent U.S. defense strategy report reflects, at least implicitly, some of these apprehensions.
He ends the piece flatly:
Both sides should be open to conceiving of each other’s activities as a normal part of international life and not in themselves as a cause for alarm. The inevitable tendency to impinge on each other should not be equated with a conscious drive to contain or dominate, so long as both can maintain the distinction and calibrate their actions accordingly. China and the United States will not necessarily transcend the ordinary operation of great-power rivalry. But they owe it to themselves, and the world, to make an effort to do so.
But — in reality — American and Western policy is nothing like as respectful toward China as Kissinger might hope.
As I wrote earlier this month:
The last hope for American imperial hegemony is to bring the Arab Spring to Moscow, Beijing, Tehran, and Islamabad.
Kissinger — while not explicitly endorsing such an eventuality — recognises the possibility:
The political scientist Aaron Friedberg writes, for example, that “a liberal democratic China will have little cause to fear its democratic counterparts, still less to use force against them.” Therefore, “stripped of diplomatic niceties, the ultimate aim of the American strategy [should be] to hasten a revolution, albeit a peaceful one, that will sweep away China’s one-party authoritarian state and leave a liberal democracy in its place.”
And — for all the hullabaloo about war with Iran —the Arab Spring model is the State Department’s last best hope for maintaining American primacy in the face of (as Tyler Durden puts it) insolvency. War, proxy war, or trade war with the Eurasian powers is too costly, too risky, too open-ended for America today.
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